… is the same as on this date last year. I will run this Quotation of the Day every February 12th – Julian Simon’s birthday. It’s from page 64 of Julian Simon’s 1996 magnum opus, The Ultimate Resource 2:
The quantity of a natural resource that might be available to us – and even more important the quantity of the services that can eventually be rendered to us by that natural resource – can never be known even in principle, just as the number of points in a one-inch line can never be counted even in principle.
A resource is a bundle of services that can be rendered to humanity. Take as an example petroleum. It renders energy as fuel, malleable viscosity that becomes plastics, and other molecular arrangements that become key ingredients in petrochemicals and pharmaceutical products. Each and every one of these rendered services originated in creative human minds that discovered how to extract these services from those particular molecular arrangements.
Because human creativity is on-going – or, under encouraging cultural and institutional settings, can be on-going – Simon is correct that, even in principle, we cannot know how much of a natural resource is available to us.
This key (and keen) insight remains valid even if we limit our attention to only one particular kind of service rendered by a resource – say, petroleum’s rendering of the service of fuel. Let’s assume (contrary to fact) that we know for certain that there are now only five trillion barrels of crude oil available on earth. This number – “five trillion barrels” – appears to be objective, as well as a hard constraint. But economically it tells us surprisingly little.
Suppose a petroleum engineer will discover tomorrow that mixing each barrel of petroleum with some tiny amount of readily available other substances will double the energy that we can extract from each barrel of petroleum. Or suppose that there occur major breakthroughs in automotive engineering and in the design of fuel-oil heating systems. One breakthrough doubles the mileage that each gasoline- and diesel-powered vehicle gets from each gallon of fuel, while the other cuts in half the amount of fuel needed to render a certain amount of heat over a certain amount of time. Each of these creative human acts will dramatically increase the amount of petroleum services available to humanity. (If petroleum were used only to make fuel for engines and heating systems, these creative acts would literally double the amount of petroleum services.) There will still be five trillion barrels of accessible petroleum on earth, but when reckoned as a resource, the amount of this resource will have enormously increased.
The “five-trillion-barrels” number is economically nowhere nearly as objective or as important – or as constraining – as it seems.
The late, great Julian Simon was born on this date in 1932.